New Home Construction in Illinois

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Hello,

I'm working a new home construction project in the state of Illinois.

Here is the quick break down of the deal:

Property type: SFM

Size of Property/Lot: 1600sq/10,000sq

Total cost (including lot, building cost and impact fees/permits): 150k

Appoximate sale value: 180K

Cash flow before TAX: $681 per month

CAP rate: 10%

The plan is to build something basic without bells and wistles and hold for rental. There are more lots in the sub-division so this would be a proof of concept and if it works we will build more. According to local realtors, the rental market has been very strong. However my concern is that the property value of the area we are trying to build hasn't been going up yet. The comps around the area are between 150 to 200k. I'm fairly new in RE investing and not sure if it make sense to build if the market price of a property is close to the build cost..

Thanks,

-Steve